NEW RULES OF THE ROAD — When Joe Biden faced opponents on the campaign trail who wanted deep changes to the global economy, he comforted wealthy donors with a now infamous line: “nothing would fundamentally change.” Four years on, his team is singing a different tune. While it lacks the bluster of Trump’s trade wars, Biden’s economic team is quietly pursuing a revolution in global economics — throwing out the conventional free trade wisdom of the last half century that leaders of both parties now blame for hollowing out the middle class, fueling populist backlash, and making the U.S. economy dangerously reliant on China. U.S. Trade Representative Katherine Tai advanced that agenda Thursday in a major speech at the National Press Club, the latest in a series from Biden’s team laying out his new “worker-centered” trade platform. Instead of incentivizing the “race to the bottom,” where U.S. companies ship jobs overseas for profitability, Biden wants to build a set of economies that agree to higher wages and environmental standards — attracting investment there, rather than adversaries like China. Tai called it “using trade to create a race to the top.” It’s hard to overstate the ambition of that project. In one form or another, the race to the bottom has characterized each stage of modern economic development as businesses continually sought out cheaper labor and materials. Moving away from that “old, colonial, extractive model” of economics is a gargantuan task, Sabeel Rahman, until recently Biden’s head of the Office of Information and Regulatory Affairs, pointed out after Tai’s speech. “What are the ways we can make common cause [with other nations] on moving away from an extractive economy in the U.S. and extractive global economy to something that lifts everyone?” he said. “That's pretty radical, and actually, pretty incredible to have [Tai] put that on the table in a public-facing speech.” It’s a decidedly left-wing outlook on economics, where the administration recognizes a divergence between the interests of workers — regardless of nationality — and the owners of global corporations. Former Biden antitrust adviser Tim Wu made that distinction explicit in remarks following Tai’s speech: “Not to overstate this, but in class terms, there are working classes around the world and there are also large, concentrated producers around the world,” Wu said. “Even through and over borders, you can see that the natural interests of those classes are diverging.” The big question is how the world will react. After decades of Washington pushing pro-globalization policies — and setting up institutions like the World Trade Organization — will foreign governments buy the idea that the U.S. really wants new rules of the road? And will Biden’s new scheme be enticing enough to lure nations away from China and its own model of authoritarian, state-led growth? It’s a credibility gap that Tai tried to address on Thursday, saying that America’s economic history gives it a unique opportunity to shape a new global system. “We, as the United States, have been through our own experiences being the supplier of raw materials and free and cheap labor to more advanced economies,” she said, arguing the U.S. is “uniquely well situated to offer a version of globalization that is built on partnership that isn't built on exploitation or trapping less developed economies upstream.” Still, many global watchers are skeptical. The administration will have to do more than talk if world nations are to buy into its new economic order, said Nabil Ahmed, the economic justice lead at the humanitarian nonprofit Oxfam. “That the USTR is saying it's time to turn the colonial mindset on its head and counter liberalization is to be applauded,” he wrote to POLITICO. “But the question that hasn't been answered yet is will the administration actually throw its weight behind the policy changes necessary to carry out that vision?” Tai says they’re working on it. Early examples include Biden’s Indo-Pacific Economic Framework in Asia, the administration’s talks with Europe and Japan on less-polluting steel, and the U.S.-Mexico-Canada Agreement, the updated North American free trade pact signed under President Donald Trump in 2020. Those efforts represent allied nations “thinking through how do we change the dynamics of the unfettered liberalization?” Tai said. “How do we come together and create a new framework that's going to create different incentives?” “You see us trying to innovate what friend-shoring, near-shoring, re-shoring looks like in real time,” Tai said. “We don’t have the answer right now. But you see the direction of travel. And given the nature of the global economy, these objectives are not things that we can accomplish by ourselves, and so we had better figure out how we can accomplish them together.” Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at gbade@politico.com or on Twitter at @GavinBade.
| 
No comments:
Post a Comment